DCIT, CIRCLE- 10(1), NEW DELHI vs. GAUTAM CREDITS PVT. LTD., NEW DELHI

ORDER PER ANADEE NATH MISSHRA, AM: (A) This appeal has been filed by Revenue against the impugned appellate order of Learned Commissioner of Income Tax

(Appeals)-4, New Delhi [“Ld. CIT(A)”, for short], dated 08.08.2018 for Assessment Year 2015-16. Grounds taken in this appeal of Revenue are as under:

Whether on the facts and in the circumstances of the case “1. and in law, the Ld. CIT(A) has erred in deleting the addition of DCIT vs. M/s Gautam Credits Pvt. Ltd. Rs.1,83,51,579/- made by the AO on account of undisclosed receipts from the business of running vehicles. a) Whether, the Ld CIT(A) has erred in not appreciating the facts that in terms of the subscription agreement entered into by the assessee with subscribing drivers, the driver is required to pay fixed subscription amount and therefore, income at such fixed rate in terms of the agreements is deemed to have accrued to the assessee during the year. b) Without prejudice to the above, whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition on account of undisclosed receipts, not appreciating the fact that the explanation furnished by assessee regarding the difference between receipts as declared by the assessee and the receipts as per subscription agreements with subscribing drivers was completely ad hoc and unsubstantiated as the assessee had failed to produce any details or documents in support thereof.

DCIT vs. M/s Gautam Credits Pvt. Ltd. estimation, the Assessing Officer followed the assessment order in assessee’s own case for Assessment Year 2013-14, in which also yearly receipts were estimated by the Assessing Officer at Rs.4,38,00,000/- ; and an amount of Rs.1,12,57,911/- was added by the Assessing Officer to the assessee’s income. The estimation of the yearly receipts made by the Assessing Officer, for both the aforesaid years (Asst. Year: 2015-16 and Asst. Year 2013-14), was based on the estimation made by the Assessing Officer, at the rate of Rs.600/- per vehicle per day for all the 365 days in the year.

Thus, yearly receipts were estimated at Rs.4,38,00,000/- for Assessment Year 2013-14 also, vide assessment order dated 09.03.2016 passed u/s 143(3) to Income Tax Act; adopting the identical figure of Rs.600 per vehicle per day all the 365 days in the year.

(B.1) The assessee filed separate appeals before the Ld. CIT(A) against the aforesaid impugned assessment order dated 09.03.2016 for Assessment Year 2013-14 and assessment order dated 18.11.2017. The Ld. CIT(A), vide separate orders dated 08.08.2018 and 17.11.2017, allowed the assessee’s appeals and deleted the DCIT vs. M/s Gautam Credits Pvt. Ltd. aforesaid additions of Rs.1,83,51,579/- and Rs.1,12,57,911/- for Asst. Year 2015-16 and Asst. Year: 2013-14 respectively. The relevant portions of the orders of Ld. CIT(A) are reproduced below:

Asst. Year: 2015-16 (impugned appellate order dated 08.08.2018)

“ On careful consideration of the facts and circumstances of the case, it is obvious to me that AO has made huge addition without bringing any cogent evidence on record suggesting that there is suppression of actual receipt by the appellant company leading to understatement of income. Once the appellant put forward his explanation emphasizing the correctness of its declared receipt, the onus shifted to AO to reject the same on the basis of positive findings and cogent reasoning. The accounts of the appellant are subject to statutory audit and there is no adverse observation of the AO with regard to audit report. No specific defect has been noted by the AO in the books of accounts. Under these circumstances, estimated addition based mainly on subjective observations and without any corroboration is not sustainable in the eyes of law. Making such huge ad-hoc addition without any clear adverse finding cannot be accepted as a legal and justifiable method ‘to safeguard the interest of revenue’. In view of above discussion, estimated addition amounting to Rs.1,83,51,579/- is hereby deleted and the ground DCIT vs. M/s Gautam Credits Pvt. Ltd. no.1[including 1(a) to 1(d)] is allowed. Grounds of appeal succeed.” Asst. Year: 2013-14 (appellate order dated 08.08.2018)

“ In the present case, the appellant has submitted that the estimation has been made by the AO as against the details of actual hire charges received by the appellant company from the drivers from whom the taxis were given on hire, A perusal of the assessment order reveals that the AO has not brought on record any evidence suggesting that the said amount as estimated has been received by the appellant. The Appellant is a Pvt. Ltd. Company with audited books of accounts and the AO has made adhoc disallowances without rejecting the books of accounts. In view of the submissions filed by the Appellant, the addition is deleted. Hence, the Ground no. 1 is allowed.”

(B.1.1) The present appeal before us, has been filed by Revenue for Assessment Year: 2015-16 against the aforesaid impugned appellate order dated 08.08. 2018 of the Ld. CIT(A). In the course of appellate proceedings in Income Tax Appellate Tribunal, the assessee filed a paper book consisting of the following particulars:

S. No. Particulars 1 Ground of appeal filed before CIT(A)-4

2. Appeal Order CIT(A)-4 in favour of assessee for A.Y.2015-16 3. Appeal Order CIT(A)-35 in favour of assessee for A.Y.2013-14 4. Assessment Order A.Y.2016-17 Page 5 of 9 DCIT vs. M/s Gautam Credits Pvt. Ltd. (B.1.2) At the time of hearing before us, the Ld. Sr.

Departmental Representative (“Sr. DR” for short) relied on the aforesaid assessment order dated 09.03.2016.

(B.2) The assessee was represented by Sh. Mohan Singh Jaitwal, the Director of the company. He drew our attention to the fact that similar addition, and in identical fact and circumstances, made by the Assessing Officer for Assessment Year: 2013-14 have already been deleted by the Ld. CIT(A). He further submitted that estimation of income was not permissible without rejection of books under 145(3) of IT Act, and drew our attention to the facts that audited books of the assessee were not rejected by the Assessing Officer, and that no defects were found by the Assessing Officer in the books of accounts. He further submitted that the addition was made by the Assessing Officer without any enquiry or verification, which cannot be sustained. He also submitted that idle period for the various vehicles was ignored by the Assessing Officer. He furthermore submitted that the addition made by the Assessing Officer was an ad hoc addition without any proper basis or DCIT vs. M/s Gautam Credits Pvt. Ltd. justification. Moreover, he also submitted that the order passed by the Ld. CIT(A), deleting the addition made by the Assessing Officer, was a just and fair order in the facts and circumstances of the case, which should be upheld, and Revenue’s appeal against it should be dismissed.

(B.2.1) We have heard both sides. We have perused the materials on record. We find that the Ld. Commissioners of Income Tax (Appeals) have given concurrent findings for this year (Assessment Year: 2015-16) and in the earlier year (Assessment Year: 2013-14) in favour of the assessee, and rejected the estimation of yearly receipts made by the Assessing Officer, at Rs.4,38,00,000/-. No material has been brought for our consideration from either side, to persuade us to interfere with the order of the Ld. CIT(A). Though the Ld. Sr. DR for Revenue relied on the order of the Assessing Officer, he did not point out any mistake in the order of the Ld. CIT(A) for Asst. Year 2015-16 and Asst. Year 2013-14. Moreover, the various submissions and contentions of the Director of the assessee company, which have been mentioned in foregoing paragraph (B.2), have not been Page 7 of 9

DCIT vs. M/s Gautam Credits Pvt. Ltd. controverted by the Ld. Senior Departmental Representative for Revenue. In view of the foregoing, and in the specific facts and circumstances of the case before us, we decline to interfere with the impugned appellate order of the Ld. CIT(A). Accordingly, this appeal filed by Revenue is dismissed.

(C) In the result, the Revenue’s appeal is dismissed.

Order pronounced on 10.05.2022.